Here, we explain all you need to know, and why it could cost you dear if you don’t register on time…
Why do I need to register for self-assessment?Since January 7 this year, the Child Benefit system has been means-tested. Previously, Child Benefit was paid to all families with children regardless of their income, but under the new system, families where one person earns more than £50,000 or more lose some of their benefit, or all of it if they earn £60,000 or more.
Those who are no longer entitled to receive Child Benefit in full were given the option either to have their payments stopped, or to continue to receive it, and then declare it on a self-assessment tax return, so that the money can then be repaid through the tax system in the form of a tax charge.
If you’ve carried on getting Child Benefit, you’ll therefore need to sign up for self-assessment so that you can pay back any benefit you owe.
Remember, this only affects families who have lost some or all of their entitlement to Child Benefit. Families where both or one parents each earn less than £50,000 can keep their Child Benefit in full and don’t have to do anything,
Don’t miss the October 5 deadline
Although you don’t have to file your tax return until either October 31 or January 31 depending on whether you file on paper or online, you’ll have to sign up by October 5 or you might have to pay a penalty, which could be at least 15% of the tax due.
Anita Monteith, manager from the Institute of Chartered Accountants in England and Wales (ICAEW) Tax Faculty said: “I would urge those affected to register for self-assessment as soon as they can. The more prepared you are for self-assessment, the easier it will be.”
If you’ve never filed a tax return before you’ll need to start gathering together any information you might need in order to complete the form.
This will include any details of all your income, as well as details of the Child Benefit to be clawed back. For this, you will need the end of year P60 your employer will have given you, as well as details of any bank interest received on any savings. Remember that your income will also include things such as rental income if you have a property you let out, as well as any self-employed earnings.
How do I register for self-assessment?
You can register for the self-assessment system online by completing the online form SA1 ‘Registering for Self-Assessment’ at the website http://www.hmrc.gov.uk/. Once HMRC has set up tax records for you, you’ll be sent a ‘Unique Taxpayer Reference’. You can then sign up for HMRC Online Service and send your tax return in online.
Although the usual deadline for filing online is January 31, if you want HMRC to include the amount of Child Benefit you owe in your tax code, rather than having to pay it back as a separate tax charge, you’ll need to send in your return online by December 30, 2013.
If you already fill in a self-assessment tax return every year, then as well as all the information you usually submit, you just need to declare the Child Benefit you are entitled to receive when you complete your 2012-13 tax return.
How do I work out how much I owe?
If you or your partner earns £60,000 or more, then you are no longer to receive any Child Benefit at all, so the amount of tax that will be clawed back will be basically equivalent to the amount of Child Benefit you have received.
If your income is between £50,000 and £60,000, there is an online calculator available to help you work out your likely tax charge here.
Can I stop Child Benefit payments?
Yes, you can do this by notifying HMRC that you want the payments stopped. However, remember that if you stop your payments now, you will still have to complete a tax return this year for the 2012-13 tax year and one for the 2013-14 tax year, as you will have received several payments since the start of the 2013 tax year on April 6.
You only don’t have to complete a tax return once our Child Benefit payments have stopped for a whole tax year, unless there are other reasons you need to file one.
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